1. What are the reasons for the Society's
current difficulty in raising sufficient funds to cover its operations?
What efforts has the Society made to increase the amount of money
raised?

In March 1998 the Society had liquid reserves
of £35.8 million and annual expenditure of £29.6 million.
This was the result of the outstanding performance of equities
over previous years. In its Annual Report for that year the Society
announced that it would be using £12 million of its reserves
to fund new work with children and young people and that it had
developed a new fundraising strategy to raise additional funds.

Net fundraising income has risen by 7.5 per
cent a year over the intervening years but this was far short
of the target which had been set.

The strategy for increasing voluntary income
has focused on two areasnew sources of income and reducing
costs. The Society is the leading charity in promoting international
adventure treks and was also one of the first to be involved in
face-to-face fundraising approaching people on the street to support
the charity. It has also cut its costs significantly in the past
year with the result that the net delivery of fundraising income
is projected to increase by 38 per cent in the two years up to
March 2003.

2. The Society has operated at a deficit
over the last four years. When did it become apparent that action
would need to be taken to address the deficit?

The real risk that the Society would not meet
its ambitions for long-term growth in voluntary income became
clear in September 2000 when preliminary figures for the first
half of the year were prepared. These showed disappointing results
and the trustees approved savings of £2 million (only £50,000
of which related to Wales) which were implemented during that
financial year. They also set up a monitoring group of trustees
to work with the directors on identifying savings.

Fundraising income grew sharply in the second
half of 2000-01 and the trustees took the view that it was better
to maintain projects in the light of this improved performance
rather than to make premature closures. Further savings were made
without any project closures but these savings have almost all
been absorbed by inflation which costs the Society £1.2 million
a year. This is because the Society's largest bill is for staff
pay which is linked to the local authority pay scales and inflation
awards.

Fundraising growth slowed down earlier this
year and, while growth is now at our long term target level (vindicating
the earlier investment), this will not make up for the earlier
years of slow growth. By July it was recognised that substantial
further cuts could not be delayed any longer.

3. What projects does the Society operate
in Wales? What efforts are being made to find alternative sponsors
for these projects after July 2002?

List of projects attached.

The Society has always made clear its commitments
above all, to finding alternative agencies or sponsors to take
over its projects and to ensuring that the children and young
people involved have a continuing service. We have recruited additional
expert business planning resources to ensure that this takes place.
We are also active partners in the Task Force which has been set
up by the Minister for Health and Social Services in the Welsh
Assembly.

4. When the decision to close the Society's
operations in Wales was taken, what alternative options were considered?

The trustees were asked to consider three main
options:

 making all of the savings in England
(this is dealt with in point 5);

 reducing the work in Wales by half.
While this would avoid the sense of abandoning our work in Wales
there were two difficulties. It would mean making a further £500,000
of savings in England (see point 5 below) and it would reduce
the work in Wales to a token presence which would not be able
to have the national impact which we had had so far; and

 closing all of the work in Wales.

5. Why was the decision taken to close the
Society's operations in Wales completely, rather than to downsize
operations across England and Wales?

The process of returning to a balanced budget
from a peak deficit of £10.8 million has involved two programmes
of closuresthe present one and one in October 2000.

In October 2000 the Society made savings of
£2 million of which £1.45 million came from our work
with children and young people in England and £50,000 from
our work in Wales (The balance of £500,000 came from other
areas).

In the present programme the total savings are
£6.4 million of which £5 million is in England and £1.4
million in Wales. In respect of our direct work with children
and young people the savings are £2.4 million in England
and £1.1 million in Wales.

It is my considered view as Chief Executive,
advised by my senior managers, that the total savings of £3.85
million over two years in our direct work in England are the maximum
which can be made. To reduce the project base further in England
would significantly harm our position as a national charity within
England with a capacity to influence Parliament and Government
Departments.

6. Whom did the Society consult about the
proposed closure?

The options put to the trustees involved the
likely redundancy of a large number of staff in England and Wales.
As is accepted good practice the Society took the view that it
could not consult external bodies about such a likelihood before
staff themselves and their Trades Union were aware of this.

Because of the Society's close links with the
Anglican Church, the Archbishop of Wales was informed orally and
the Archbishop of Canterbury was informed in writing of the possibility
of this outcome. The information was given to the Archbishop of
Wales in sufficient time for him to discuss this with his Bishops
at one of their regular meetings and for him to make written representations
to the trustees before they made their decision.

The Society deeply regrets that decision it
has had to take and welcomes the opportunity to work with members
of the Task Force on options for the future. Nevertheless the
reality remains that the Society has been subsidising its work
on Wales from donations made in England and the core question
becomes who is willing to take on these costs in order to maintain
the work in its current form.

7. For each of the last five years, what
proportion of the Society's funds were raised in Wales?

See attached annex.

8. What provision is being made for the Society's
staff in Wales who face redundancy?

The Society recognises the MSF Trade Union and
agreement has been reached on the process for dealing with possible
redundancy within the Society's existing procedures which have
been agreed with MSF.

The Society has agreed to make redundancy payments
which are more generous that the statutory scheme. All staff receive
payments calculated in accordance with the statutory scheme but
enhanced in three ways:

 all service is allowed to count towards
the redundancy payment and is not limited to 20 years;

 the weekly wage is not limited to
£240; and

 the ensuing calculation is enhanced
by 50 per cent.

Also temporary staff who have been employed
for 12 months or more and all staff on standard contracts regardless
of service will receive a minimum payment of one and a half or
two and a quarter weeks depending on their age.

The Society has procedures which gives the staff
facing redundancy priority in applying for vacancies and all vacancies
in the coming months will be scrutinised by senior managers to
see if they should be reserved solely for staff facing redundancy.

We also have a programme of support for staff
facing redundancy helping them to look at their career plans,
the choices they might make and how to prepare themselves for
interviews.